San Jose to consider business tax break

SAN JOSE -- San Jose officials Wednesday suggested those earning less than $11,000 a year shouldn't have to pay either city business taxes or exemption fees in response to complaints from youth sports officials that the city was burdening them with payment demands for what they called essentially volunteer work.

"You don't have to pay it, and we don't have to process it" was how Mayor Chuck Reed characterized the idea at the Rules and Open Government Committee he chairs. The committee voted unanimously to schedule a March 5 City Council vote on issues relating to the city's business tax.

The matter arose after the city called for an "amnesty" through March 29 during which businesses that had not paid the city business tax, which starts at $150 a year, for several years could pay without late fees or penalties. Notices went to businesses and individuals based on state income tax filing information from the Franchise Tax Board.

Those earning less than $22,000 qualify for an exemption from San Jose's business tax, but they must submit income tax information and pay the city a fee of $38 a year to verify that. City officials said the $22,000 threshold represented twice the poverty level, and that San Jose gets $270,000 a year in exemption fees, a figure Councilman Pierluigi Oliverio said roughly equalled the annual cost of a couple police officers.

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But when the city sent notices of the amnesty to businesses and individuals based on their state tax filings, many umpires and others who officiate youth sports for small fees complained they were unaware of the requirement and that even the $38 fee was burdensome.

"Our officials volunteer their time for the most part," said Duane Morgan, assistant commissioner for the California Interscholastic Federation's Central Coast Section, which governs high school athletics from San Francisco to King City. "They make money to offset expenses."

Dan Hendrix, a high school and Little League umpire, told the committee he recently had to go to Sacramento for training that lasted less than the time he spent in the car to get there. Annually, he said he gets paid only about $3,000 for umpiring, but often has to pay or volunteer time for trainings and seminars.

Reed and other committee members were sympathetic and had suggested specifically exempting youth sports officials.

But committee member and Councilman Pete Constant argued that several other low-earning part-time occupations could make a similar justification.

"You open up this Pandora's box," Constant said. "You could say a company offering tutoring services to children or a hospice worker is providing a valuable service."

So he suggested the city exempt anyone earning less than $11,000 -- a figure that would reflect the poverty level -- not only from the business tax but the exemption fee. Those earning $11,000 to $22,000 could still claim a city business tax exemption but would have to pay the processing fee and provide documentation.

The council on March 5 would be asked to consider extending the business tax amnesty through May, exempting city police officers from paying the tax for off-duty work they do in uniform for outside employers and the lower threshold for exempting both the tax and exemption fee.